Have you been paying attention to shares of AMETEK (AME)? Shares have been on the move with the stock up 8.4% over the past month. The stock hit a new 52-week high of $90.87 in the previous session. AMETEK has gained 34.2% since the start of the year compared to the 19% move for the Zacks Computer and Technology sector and the 21.6% return for the Zacks Electronics - Testing Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 1, 2019, Amtek reported EPS of $1 versus consensus estimate of $0.97 while it beat the consensus revenue estimate by 1.09%.
For the current fiscal year, Amtek is expected to post earnings of $4.08 per share on $5.25 billion in revenues. This represents a 24.01% change in EPS on an 8.41% change in revenues. For the next fiscal year, the company is expected to earn $4.36 per share on $5.46 billion in revenues. This represents a year-over-year change of 6.84% and 3.95%, respectively.
Amtek may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Amtek has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 21.8X versus its peer group's average of 21.3X. Additionally, the stock has a PEG ratio of 2.32. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Amtek currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Amtek passes the test. Thus, it seems as though Amtek shares could have potential in the weeks and months to come.
How Does Amtek Stack Up to the Competition?
Shares of Amtek have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Cubic (CUB), Keysight Technologies (KEYS), and OSI Systems (OSIS), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Amtek. Still, the fundamentals for Amtek are promising, and it still has potential despite being at a 52-week high.
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